Whether you’re a builder, plumber, electrician or landscaper, managing your business finances is as important as the work itself. Yet for many tradespeople, the bookkeeping gets pushed aside until it becomes a crisis. Here’s a practical guide to keeping on top of it.
What Records Do Tradespeople Need to Keep?
You need to record all income — including cash jobs — all business expenses including materials, fuel, tools and vehicle costs, VAT if registered, CIS deductions if working as a subcontractor, and payroll records if you employ staff.
💡 Key takeaway
Stock that hasn’t sold by year-end must be valued at the lower of cost or net realisable value — inflating stock inflates profit and your tax bill.
CIS — Construction Industry Scheme
If you work in construction, CIS affects you. As a subcontractor, your contractor deducts either 20% or 30% from your payments and pays it to HMRC. You then offset these deductions against your tax bill. Registering for CIS ensures you only face the 20% deduction rate.
VAT for Tradespeople
If your turnover exceeds £90,000, you must register for VAT. For tradespeople, the Flat Rate VAT Scheme can be financially beneficial — you pay a fixed percentage of turnover rather than calculating VAT on every transaction. Your bookkeeper can advise on which scheme suits you.
Vehicle and Travel Expenses
Tradespeople often have significant vehicle costs. You can claim business mileage at 45p/mile using simplified expenses, or claim actual costs proportioned to business use. Keep a mileage log and always record the business purpose of each journey.
Working with a Bookkeeper
Many tradespeople find that a monthly bookkeeping service pays for itself immediately — in time saved, tax saved and penalties avoided. Your bookkeeper handles CIS, VAT, self assessment and day-to-day records so you can focus on the tools.
Frequently Asked Questions
Do I need to register for CIS?
If you work in construction as a subcontractor, you should register to avoid the higher 30% deduction rate. If you use subcontractors as a contractor, you must register and deduct from payments.
Can I claim tools and equipment as expenses?
Yes — tools, equipment and PPE used for business are allowable expenses. Major equipment purchases can benefit from the Annual Investment Allowance.
What’s the best accounting software for a tradesperson?
Xero and QuickBooks both work well for tradespeople. For very simple needs, a simpler app like Tradify or Sorted may suffice alongside basic bookkeeping.
